ERM Glossary: Net Stable Funding Ratio (NSFR)

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The Net Stable Funding Ratio relates to a proposal within Basel III that will require banks to maintain a minimum proportion of long-term assets that are funded by long term, stable funding.

In this context, ‘stable’ funding includes most types of customer deposits, long-term wholesale funding and the bank’s equity (more precisely the portion of those types and amounts of equity and liability financing expected to be reliable sources of funds over a one-year time horizon under conditions of extended stress) but excludes most types of short-term wholesale funding (the assumption being that this type of funding may be more likely to be withdrawn at short notice). See Available Stable Funding for more details.

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